Deak pegs earnings forecast on Virginiatown custom mill

After losing more than $4 million last year, Deak Resources (TSE) is shooting for net earnings of about 10 cents per share in 1991.

President Gerry Cooper told shareholders at the recent annual meeting in Toronto that increasing production from the Kerr custom mill in Virginiatown, Ont., has turned the company into a money-maker. In May, Deak recorded its first monthly profit after the mill processed a record 33,000 tons of ore. For the first half of 1991, Cooper expects the company to record a profit of $900,000.

Deak, which was formed in 1988 through the amalgamation of three exploration companies, has 33 million shares issued and outstanding on a fully-diluted basis. The company’s common shares recently traded at 26 cents.

“We’ve survived, we were lucky,” Chairman Malcolm Slack told shareholders as he reviewed the company’s many projects.

While half of the mill feed is taken from pillars at the former producing Kerr mine, Deak has also managed to secure ore from several regional operations including the Cheminis, Francoeur and Duquesne gold mines.

Meanwhile, the company expects to find another 5-10 million tons of ore within known structures around the Kerr mine. Generally lying south of the previous workings, the structures were identified but not explored when the Kerr was operated by Kerr Addison Mines.

In order to finance a major exploration drive at Virginiatown, Deak has been searching for potential joint-venture partners. The most likely candidate seems to be Kennecott Canada. The larger company, which was out in full force at the Deak meeting, holds ground in the immediate vicinity of the mine.

By the end of this year, subject to modest financing and permitting, Deak hopes to have the remaining idle mill circuit treating either base metal or additional gold ores. At that point, mill capacity will be 4,500 tons per day.